FOCUS

Know how

Know-how, or secrecy, concerns the knowledge of a technical nature (in the widest sense of the word, so regarding organizational, technical, commercial and business activities) of a Company's activity. Such knowledge, both due to the results it allows to obtain and to its own secret or at least confidential nature, contributes to increase the competitive capacity of the enterprise which owns it. Know-how is the systematic and coordinated combination of practical and applicative knowledge which can be per se either partly or completely inventive. Such knowledge is intended to manage a specific process of the Company in the best possible way. The value of the know-how can consist both in the novelty or originality of the individual items of knowledge, or in the combination thereof, coordinated and harmonized by applied experience which has allowed to modify and harmonize this combination in such a way as to obtain Company results that would otherwise not be obtainable. This explains its considerable value in an economy based on competition, productivity and commercial ability. It must be clarified that where there inventive features in the know-how, for example particular algorithms, there is nothing to prevent the Company from protecting the algorithms, with the appropriate strategies, so as to obtain a double protection with secret know-how and as a patented part.

It must also be clarified that the know-how we are referring to is the objective knowledge which consists of that sum of immaterial entities which are separable from those that contributed to their formation and structuring. This sum therefore has its own objective autonomy and consists of autonomously identifiable and assessable elements. It can therefore be transferred to third parties, if so desired, either totally or partly.

It is not therefore that subjective know-how which can be attributed to the specific person who is particularly able and capable, but the technical know-how and commercial know-how of the enterprise.

Technical know-how is the organized and harmonic sum of immaterial entities of a technical, technological and organizational nature used in the process of training and production of an enterprise. Technical know-how can consist of special algorithms, perhaps deriving from common formulas, but which have become meaningful due to the integrations and modifications deriving from experience and practical application.

Commercial know-how comprises the knowledge that pertains to the organizational and proactive phase of the commercial action, also in terms of presenting offers, promoting goods and services, pre- and post-sales assistance.

The topic of industrial secrecy, as mentioned above, is often closely connected to that of commercial secrecy, from which it cannot always be clearly distinguished, both because there are similar problems involved, and also because a common discipline is applied to them.

For some time now, the theft and appropriation of the specific know-how of a competitor Company has been a quick and lucrative way to accelerate production times, to simplify Company structures, to facilitate entry into a market, to exploit other people's knowledge in order to implement one's own, to present one's goods in a manner known and appreciated by the clients, a presentation which allows to overcome the barrier of the "first approach" which in technicians is very strong and hard to break.

Since know-how has the capacity to improve certain and specific activities, owning it confers "competitive dynamism" on the enterprise, which thus finds itself in an optimum situation to make progress. Know-how therefore always and in every case assumes a considerable economic value for the Company that owns it, irrespective of its novelty or secrecy.

This particular feature of know-how has a character of "substantiality", even if understood in relative terms, since it confers on the Company that has it an "advantage" in terms of evolutionary and competitive capacity.

It should be noted that know-how can be "secret" or "classified" and it can be "confidential". It is quite obvious that know-how, being a combination of finalized and harmonized information and knowledge, typical of that enterprise and of that purpose, can be structured for a limited use in the field of the Company, or it can also be extended in a targeted and partial way in the outside world. It is obvious that where know-how is used as an interface with clients, for example in commercial activities, then it has and must have a confidential content. The confidential content is normally re-asserted by precise written formulas of property and confidentiality. This confidentiality will reverberate with both commercial interfaces (the proposer and receiver).

But while the receiving interface has an interest in knowing the substance of the offer as specific content, the third party competitor, more than an interest in the content, has an interest in the method, knowledge and data which, based on its know-how, the Company that owns the know-how has perfected, harmonized and finalized, to comfort the commercial action by organically transferring specific information, knowledge and data to the Client.

A competitor does not appropriate the know-how, nor does he preserve it, if the know-how is not of interest to him, even if only for the purpose of comparing it and assessing it. The extensive acquisition and preservation of a third party's know-how is an obvious signal of the value of that know-how, which the third party competitor recognizes and seeks.

In a Company structure there is not only know-how, there is a natural combination of different know-hows of the different sectors, oriented for specific activities. The more articulated the Company, the more these know-hows exponentially multiply. If the Company is a winner, the individual know-hows become attractive for its competitors.

Protection

Know-how does not fully come within the category of "immaterial juridical goods", because it cannot be considered an industrial invention, a utility model, an ornamental model, or a trademark, nor can it be included under copyright, and therefore it cannot be subject to the erga omnes protection that is typical of immaterial goods.

Since it is in any case a commodity, protection is recognized in Italy in two ways:

  1. protection established inter partes as a consequence of the contractual clauses signed by the parties themselves;
  2. protection established erga omnes according to the general norms expressed both by the Civil and Penal Codes and by specific norms on unfair competition and industrial secrecy.

A Company should prevent non-controllable reproduction devices from circulating inside it. This ban should be applied to all the internal staff (managers, shareholders, clerks, workers, etc.) and external collaborators (professionals, consultants, suppliers, salesmen, transporters, etc.) and also to clients.

Inter partes or contractual protection establishes that the transfer of know-how traditionally occurs through a contract. The contract may be a license (also provisional, for example to enable a supply to be made) or assignment, and can be implicit or explicit. A licensing agreement is an atypical contract, and therefore the parties to the agreement maintain a broad contractual autonomy, so that in formulating the content, while they have to respect the essential elements of the agreement, the parties do have a great freedom in negotiating. Know-how agreements are difficult to draw up, manage and apply, because in drawing up the agreement the party which is assigning or transferring know-how is generally reluctant to identify the real content of its know-how, so as to avoid surprises before the definitive signing, whereas the party receiving the know-how has every interest to see that what it is about to purchase is well identified. An incorrect identification often prevents the party purchasing or receiving the know-how from proving the inadequacy of whatever is assigned or transferred. Generally speaking, contractual clauses provide an obligation to communicate to the other party the information which, all together, constitute the know-how, in order to allow said party to use it harmoniously in his own business activity; they also include an obligation to provide consultancy and assistance, and training of the personnel of the receiving party. On the contrary, the receiving party is normally obliged to pay remuneration, and not to disclose to others the information received, even if said information contains parts that are already public: this is because, as we said, know-how includes the indivisible whole of the information which, precisely as a whole, entails the desired and/or searched for advantage.

Erga omnes protection is that legal protection which can be both civil and penal. Civil protection establishes that an entrepreneur commits an act of unfair competition when he illegally exploits the secrets, or results of the work and the experience, of the legitimate proprietor of the know-how, or commits acts contrary to professional conduct. If he finds one or more acts of unfair competition, the Judge prohibits the continuation, rules that the effects are eliminated, sentences the guilty party to pay damages and, sometimes, orders that the ruling is published in newspapers and/or the specialized press.

It should be remembered that defending one's know-how starts from the organizational structure of the enterprise and that every active action toward the outside must be carefully and scrupulously organized and controlled. By scrupulously organized we mean that not only the know-how that is to be protected must be identified, but every actor, direct and indirect, against whom action is to be taken, must be identified and qualified. Furthermore, a suitable strategy must be created, possibly one that develops over several levels and at different times.

Apart from civil protection, penal protection may also be invoked which can involve not only industrial rights but also copyright. For penal protection, its particular characteristics must be taken into account.

Penal protection involves the intervention of the judicial authorities, assisted by the judicial police (in Italy, the Financial Police or Carabinieri) in the event of confiscation of material that has been illegally removed, or material resulting from stolen know-how. In penal proceedings the injured Party must take action based on concrete facts that can easily be confirmed practically if he wants to win the case. Therefore, the typical procedures of civil actions must be forgotten, and action must be concentrated on concrete data that can easily be verified in the documents.

Penal protection, depending on the type of crime, is supported in Legislative Decree 231/01 as amended, and allows intervention based on articles of the Penal Code and the law on copyright. With regard to the Penal Code, see: arts. 615-ter; 615-quater; 615-quinquies; 617-quater; 617-quinquies; 635-bis; 635-quater; 640-quinquies. With regard to the law on copyright, see: arts. 171, letter a-bis; 171-sextier; 171-octies; 171-ter.

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